Your author is just returned from a week of vacation in Spain. Far from the seaside (in fact on a wine tasting tour in the middle of the country), constantly rotating wind turbines dominated much of the skyline. Spain is also Europe’s sunniest country, with the mercury touching 30 degrees on our trip. These developments are clearly good news if you’re an alternative energy operator. Over half of Spain’s electricity is now derived from renewable sources.

Passing the 50% mark in terms of renewable contribution must be considered a major achievement, particularly given that the EU average is only 23.0%. Two corporate interactions in (markedly cooler) London at the start of May served as a useful reminder of just how much still needs to be done to make renewables a more significant source of energy.

We were lucky to spend time with Henrik Andersen, Chief Executive Officer of Vestas. He reiterated that all countries would benefit from having “diversity in their energy mix.” Few doubt the logic of such an assertion (we first made it in 2011) but getting there remains problematic when there still exist “enormous bureaucracies and red tape” in terms of permitting for new turbines in Europe. Some countries (such as Germany and the UK) have made good progress in respect of accelerating the process, but these remain the broad exceptions for now.

One interim solution, then, may be liquefied natural gas. Sure, “the world cannot decarbonise without access to wind” (per Vestas) but consider the role that LNG can play in facilitating decarbonisation from coal-to-gas switching. Data shared in a recent presentation given by Cheniere Energy show that liquefied natural gas generates 47-57% fewer GHG emissions versus coal and up to 99% less air pollutant. Beyond the facilitation of decarbonisation, liquefied natural gas can help enable energy security and economic development. With sunnier political times in Europe perhaps still an optimistic scenario with ongoing war on the region’s borders, every step towards energy independence must therefore be considered a positive. 

14 May 2024

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Cheniere Energy and Vestas. The author of this piece has no personal direct investment in either business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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Alex Gunz, Fund Manager

Photo taken by your author in the Gredos region of Spain

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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